World Cup helps Adidas to strong financial progress in second quarter
Adidas, the Germany-based international sportswear and equipment giant, has claimed strong financial progress in the second quarter, thanks in part to a “successful activation” during this summer’s Fifa World Cup in Russia.
Sales were up by 4 per cent in the quarter to €5.261 billion ($6.104 billion), compared with €5.038 billion in 2017, while currency-neutral revenues increased by 10 per cent, with revenues at the Adidas brand up 12 per cent. Adidas said that the growth was “driven by double-digit growth in Sport Performance, on the back of double-digit growth in the training, running and football categories, as well as high-single-digit growth in Sport Inspired.”
The results mean that revenues increased by 10 per cent on a currency-neutral basis in the first half of the year, while in euro terms, revenues were up by 3 per cent to €10.809 billion from €10.485 billion last year.
For the full year, Adidas said that it continues to expect sales to increase at a rate of around 10 per cent on a currency-neutral basis, driven by double-digit growth in North America and Asia-Pacific. The company's gross margin is forecast to increase by up to 0.3 percentage points to a level of up to 50.7 per cent, compared with 50.4 per cent in 2017.
Adidas announced a retrospective accounting restatement of its Reebok subsidiary in 2016 that followed a “routine” review by the German Financial Reporting Enforcement Panel, which found that “the historical book value related to the Reebok trademark was not sufficiently proven by the annual impairment test conducted at the time.”
Adidas said: “The company has accepted the Panel's interpretation in order to come to a timely conclusion. As a consequence, the company retrospectively recognized an impairment of intangible assets related to the Reebok trademark in 2016 in an amount in the mid-triple-digit million euro range.”
Adidas was one of Fifa’s seven top-tier sponsors at this summer’s World Cup.
Kasper Rorsted, the company’s chief executive, said: “We delivered another strong quarter on the back of a successful World Cup activation. Our profitable growth was once again driven by our strategic focus areas North America, Greater China and e-commerce, while we continued to invest into the desirability of our brands and the scalability of our business. With these results, we remain firmly on track to achieve our set targets for the full year 2018 and long-term until 2020.”